China Mobile moves into next generation of communications

Nation's biggest telecom operator is moving boldly to win back customers as it rolls out its high-speed 4G services in 340 cities next year, Shen Jingting reports

China Mobile Communications Corp, the parent company of China's biggest telecom carrier, China Mobile Ltd, announced it will offer commercial fourth-generation telecom services in 340 Chinese cities next year.

Special: China Mobile to debut 4G services

Xi Guohua, chairman of China Mobile Ltd, said on Wednesday that the company will build 500,000 4G base stations across China in 2014, constituting the world's largest 4G network. The company currently has about 200,000 4G base stations.

Xi spoke during the China Mobile Global Partner Conference in Guangzhou.

China Mobile will offer 4G services in 16 cities, including Beijing and Shanghai, by the end of the year, Xi said. In Beijing, the company's 4G network already covers the area inside the Third Ring Road.

Customers don't need to change their phone numbers, but just get a new SIM card for their 4G handsets. The new mobile network achieves data download speeds of up to 80 megabits per second, four times faster than 3G networks.

"China Mobile's marketing focus next year will be in terminal sales, since mobile terminals support the development of mobile Internet," Xi pointed out.

He predicted that the total number of TD-LTE mobile phone models will exceed 200 and entry-level 4G smartphones will hit the market in 2014.

China Mobile is targeting sales of 190 million to 220 million mobile terminals running on its wireless networks by 2014, Xi said. Of those, about 100 million handsets should be 4G smartphones, Xi added.

Analysts said China Mobile's move is decisive and ambitious, and shows a strong desire to win back customers that it lost in the 3G market competition.

Bryan Wang, principal analyst with Forrester Market Advisory (Beijing) Co Ltd, said China Mobile's target of 100 million 4G smartphone sales next year is "somewhat surprising", since the carrier's total user base was about 760 million as of October.

China United Netcom Ltd and China Telecom Corp Ltd managed to increase their 3G user base to 100 million each over three years, "but China Mobile wants to achieve a similar goal in one year", Wang said.

The bold target, in terms of both network deployment and smartphone sales, will inevitably impose a heavy burden on China Mobile's budget, Wang pointed out.

"China Mobile is very likely to make record high capital expenditures in 2014, even though the company already invested huge sums in 4G projects this year," he added.

The introduction of Apple Inc's iPhone handsets could be even more costly. Since China Mobile will offer generous incentives for high-end 4G flagship smartphones such as the iPhone 5S, the company may spend tens of billions of yuan in device subsidies next year, Wang said.